A few months ago, we introduced what is possibly the best value in the junior precious metals sector - ECU Silver Mining (ECUXF or ECU.TO) http://markostake.blogspot.com/2010/02/ecu-silver-mining-as-good-as-it-gets_7745.html. The news on this company just keeps getting better.

ECU has continued to climb the rapid growth curve it commenced early this year. For the month of March, results were at record levels. Some of the highlights included a 12% increase in Silver to 33,614 ounces and a 40% increase in Gold to 705 ounces - resulting in a 27% increase in Silver equivalent to 79,443 ounces (using a 65 to 1 ratio of Silver to Gold).

The news got even better in April. The company realized a monthly sales figure of $2 million.

Recent drilling results have produced some prodigious finds.

In Velardena, the new results represent an increase in precious metals contents of about 10%, but the resources in that area would now be classified as "measured" as opposed to "inferred". The mineral resources for the CC vein in that area were classified as inferred with average width of 1.51 metres grading 1.94 grams per ton Gold, 127 grams per ton Silver, 0.80% Lead and 2.40% Zinc. By comparison, the updated results represent an increase in precious metals contents of more than 500% and the mineral resources in that area would also be upgraded to measured.

ECU now has mineral resources of 6 million ounces of Gold equivalent, which at current market prices would be worth approximately $7.2 billion! Naturally, resources in the ground do NOT take into account the cost of extraction, so the implied "asset value" would need to be discounted. However, the asset value DOES NOT take into account the in-ground assets yet to be completely delineated - resources which could theoretically multiply the potential value by many times.

Since 2007, ECU has increased its Silver equivalent ounce resource base from 100 million ounces to now more than 400 million ounces. With drilling results coming in so favorably, one can only imagine just how significant a miner this company is destined to become.

So, how much will it cost you to buy $7.2 billion in Gold in the ground plus the humongous upside of further resource upgrades? At the closing stock price of $0.75 multiplied by the roughly 300 million shares outstanding, the market capitalization is a mere $225 million. Yes, $225 Million! Put differently, ECU has $24 per share of resources, clearly at the extreme upper end of junior miner value.

The company is now profitable, has enough cash to meet future needs and has been successful in paying down its debt. As of the end of the year, ECU reported more than $7 million in cash and had reduced debt to about $15 million.

As a disclosure item, I continue to hold a decent stake in this company and expect to do so into the future. I expect to see ECU trading at many multiples its current price in the not-too-distant future - especially if precious metals prices continue their march upward.

Marko's Take